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TMI Blog2024 (10) TMI 529X X X X Extracts X X X X X X X X Extracts X X X X ..... of the learned CIT(A) on this issue and the same is upheld. As a result, grounds raised by the Revenue are dismissed. - Shri. Om Prakash Kant, Accountant Member And Shri. Sandeep Singh Karhail, Judicial Member For the Assessee : Shri Anuj Kisandwala For the Revenue : Shri. Ashok Kumar Ambastha Sr. DR ORDER PER SANDEEP SINGH KARHAIL, J.M. 1. The present appeal has been filed by the Revenue challenging the impugned order dated 28/03/2024 passed under section 250 of the Income Tax Act, 1961 ( the Act ) by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [ learned CIT(A) ], for the assessment year 2018-19. 2. In this appeal, the Revenue has raised the following grounds: - 1. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing the claim of deduction u/s 54F of the Income Tax Act without considering the fact that the assessee is owner of several other properties and therefore does not fulfil the requirement to claim deduction u/s 54F. 2. Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in not considering the decision of the Karnataka High Court in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee to show cause as to why the deduction claimed under section 54F of the Act be not denied as the assessee is an owner of more than one property on the date of transfer of original asset. In response to the show cause notice, the assessee submitted that owning a fractional interest in the property does not mean the assessee has full freedom to deal with the property in the manner he chooses. The assessee also relied upon various judicial pronouncements in its favour. 6. The Assessing Officer ( AO ) vide order dated 26/01/2021 passed under section 143(3) read with section 143(3A) and 143(3B) of the Act held that even if the assessee is co-owner of more than one residential property on the date of transfer of the original assessee, he will not be eligible to claim deduction under section 54F of the Act. It was further held that section 54F of the Act nowhere distinguishes between owner and co-owner. The AO also relied upon the decision of the Hon ble Karnataka High Court in CIT v/s M.J. Siwani, reported in [2014] 366 ITR 356 (Karn.). Accordingly, the AO disallowed the deduction claimed under section 54F of the Act in respect of the total capital gains amounting to Rs. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y with her husband then it cannot be said that she is the owner of the house property at the time of sale for availing deduction under section 54F of the Act. The learned AR further placed reliance upon various decisions of the coordinate bench of the Tribunal, wherein after considering the aforesaid decision of the Hon ble Karnataka High Court as well as the Hon ble Madras High Court, a similar issue has been decided in favour of the taxpayer. 11. We find that the Hon ble Madras High Court in Dr. Smt. P.K.Vasanthi Rangarajan (supra) held that merely because the assessee jointly owned another property on the date of transfer of the asset, its claim for deduction under section 54F of the Act could not be rejected in respect of capital gains earned from transfer of original asset. The relevant findings of the Hon ble Madras High Court, in the aforesaid decision, are reproduced as under: - 12. A reading of the provisions contained in Section 54F(1), as it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on the transfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluding the husband, but in joint name with her husband, we agree with the submission of the learned senior counsel appearing for the assessee herein that unless and until there are materials to show that the assessee is the exclusive owner of the residential property, the harshness of the proviso cannot be applied to the facts herein. Apart from that, 50% ownership is with reference to the clinic situated in the ground floor. As such, the entire property is not an exclusive residential property. Hence, we are inclined to agree with the assessee's contention that the joint ownership of the property would not stand in the way of claiming exemption under Section 54F. 12. We find that while deciding a similar issue in favour of the taxpayer, the coordinate bench of the Tribunal in Mukesh Arvindlal Vakharia v/s ITO, [2023] 153 taxmann.com 55 (Surat-Trib), after considering the aforesaid decision of the Hon ble Karnataka High Court as well as the Hon ble Madras High Court, observed as under: - 17. We have given our thoughtful consideration to rival contention. We have perused case file as well as paper books furnished by assessee. We note that assessee claimed deduction u/s 54F of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e properties, in view of fact that one residential property was co-jointly owned in name of assessee and his wife and he could not be treated as 'absolute owner of said property, deduction under section 54F could not be denied to him. We note that Hon'ble Supreme Court in the case of CIT v. Vegetable Products Ltd. [1973] 88 ITR 192 held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. Therefore, respectfully following the judgment of the Hon'ble Madras High Court in case of Dr. Smt. P. K. Vasanthi Rangarajan (supra). we allow ground No. 2 raised by the assessee. 13. Further, we find that in Zainul Abedin Ghaswala v/s CIT, [2023] 152 taxmann.com 662 (Mum-Trib.), the coordinate bench of the Tribunal, after considering the aforesaid decision of the Hon ble Karnataka High Court as well as the Hon ble Madras High Court, observed as under: - 4. We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The issue in dispute before us is whether the co-ownership of the assessee in more than one residential properties could make assessee li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder: 1. During relevant assessment year, assessees sold their undivided interest in land. The assessee claimed deduction under sections 54 and 54F in respect of long-term capital gain arising from sale of land. 2 The revenue authorities finding that assessee had sold undivided share in land and not land plus residential house/apartments rejected assessee's claim for deduction under section 54. 3. As regards deduction under section 54F, revenue authorities having found that assessees were having two residential houses having one half share each therein on date of sale of land, rejected assessee's claim. 4. The Tribunal, however, allowed assessee's claim for deduction under section 54F holding that 'a residential house, on date of sale of long term asset as mentioned in said section meant complete residential house and would not include shared interest in residential house. On revenue's appeal to Hon'ble Karnataka High Court it was held as under: Section 54F provides that if the assessee has a residential house he cannot seek the benefit of long term capital gain. Under this provision, merely because, the words residential house are preceded by article 'a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it stood at the relevant point of time, shows that exemption from payment of tax on the capital gains arising on the transfer of any long-term capital asset not being a residential house is available to an assessee being a Hindu Undivided Family or an individual, if the long-term capital gain is invested in purchasing a residential house or constructing the residential house within the time stipulated therein. Proviso to sub-section (1) states that the exemption contemplated under sub-section (1) would not be available where an assessee owns a residential house as on the date of the transfer and that the income from the residential house is chargeable under the head income from house property . The Finance Act, 2001 amended the proviso with effect from 2001-02 to permit exemption under section 54F, even if the assessee has owned one residential house as on the date of transfer, other than the new asset, or purchase in investments any residential house other than the new asset within a period of one year or three years as the case may be. but after the date of transfer of the original asset and the income from such residential house other than the one owned on the date of transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of CIT v. Vegetable Products Ltd. 119731 88 ITR 192. Further, the Tribunal in the case of ITO v. Upkar Retail (P.) Ltd. [2018] 94 taxmann.com 450/171 ITD 626 ITAT 'B' Bench Ahmedabad [ITA No. 2237/Ahd/2014] relying on the decision of the Hon'ble Supreme Court in the case of Vegetable Products Ltd. (supra), which was followed by the Tribunal in the case of Tej International (P) Ltd. v. Dy. CIT [2000] 69 TTJ 650 (Delhi) held that in case of conflict in the decision of the non-jurisdictional High Court, the view which is favourable to the assessee should be followed. The relevant finding of the Tribunal (supra) is reproduced as under: 4. As to what should be the view to be taken in these circumstances, ie. when there are conflicting decisions of Hon'ble Courts above and when we do not have the benefit of the guidance by Hon'ble jurisdictional High Court, we find guidance from the decision of a co-ordinate bench in the case of Tej International Pvt Ltd. v. DCIT [(2000) 69 TTJ 650 (Del)] wherein the coordinate bench has, inter alia, observed as follows:- 6. We have considered the rival submissions and perused the records. It is not in dispute that two High Courts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sider it permissible to rely upon the earlier decisions of this Tribunal even if one of them is by a Special Bench. It will be wholly inappropriate to choose views of one of the High Courts based on our perceptions about reasonableness of the respective viewpoints as such an exercise will de facto amount to sitting in judgment over the views of the High Courts something diametrically opposed to the very basic principles of hierarchical judicial system. We have to, with our highest respect of both the Hon'ble High Courts, adopt an objective criterion for deciding as to which of the Hon'ble High Court should be followed by us. 8. We find guidance from the judgment of Hon'ble Supreme Court in the matter of CIT v. Vegetable Products Ltd. [1973] CTR (SC) 177: [1972] 88 ITR 192 (SC) Hon'ble Supreme Court has laid down a principle that if two reasonable constructions of a taxing provision are possible, that construction which favours the assessee must be adopted. This principle has been consistently followed by the various authorities as also by the Hon'ble Supreme Court itself. In another Supreme Court judgment, Petron Engg. Construction (P.) Ltd. Anr. v. CBDT Ors. [1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above, we find that decision of the Hon'ble Madras High Court is in favour of the assessee and not a single decision of the Jurisdictional High Court, which is adverse to the assessee, has been referred by the Ld. DR and therefore decision of the Madras High Court being favourable to the assessee, the claim of deduction u/s 54F of the Act need to allowed, as there is no material to show that assessee is exclusively owner of the other five residential properties/flats which are occupied by the other family members. The grounds of appeal of the assessee are accordingly allowed. 14. In the present case also, not even a single decision of the Hon ble jurisdictional High Court, which is contrary to the claim of the assessee, has been placed on record/referred by the Revenue. Therefore, respectfully following the decision of the Hon ble Madras High Court and the coordinate bench of the Tribunal cited supra, we are of the considered view that the joint ownership at the time of sale of the original asset does not disentitle the assessee to claim the deduction under section 54F of the Act. Accordingly, we do not find any infirmity in the findings of the learned CIT(A) on this issue and ..... 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